Abercrombie & Fitch Company · NYSE:ANF
Abercrombie & Fitch — Investor Day (June 2022)
164 slides from Abercrombie & Fitch's investor day presentation, Jun 22, 2022
Slide 1: Always Forward Plan - June 14, 2022
J u n e 1 4 , 2 0 2 2 A L W A Y S F O R W A R D P L A N 1
Slide 2: Forward-Looking Statements
Forward-Looking Statements OTHER INFORMATION This presentation includes certain adjusted non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial measures is included in the Appendix to this presentation. As used in this presentation, "GAAP" refers to accounting principles gene
Slide 3: Investor Day Agenda
ALWAYS FORWARD Fran Horowitz, Chief Executive Officer BRAND GROWTH PLANS Kristin Scott, President, Global Brands Carey Krug, Abercrombie Marketing Robert Zajac, Hollister Marketing BREAK DIGITAL REVOLUTION Samir Desai, Chief Digital & Technology Officer FINANCIAL DISCIPLINE Scott Lipesky, Chief Fina
Slide 4: Always Forward - Fran Horowitz
S H E / H E R Always Forward Fran Horowitz A L W A Y S F O R W A R D P L A N 4
Slide 5: 2025 Targets
$4.1B - $4.3B A L WAY S F O R WA R D P L A N REVENUES 8%+ OPERATING MARGIN LONGER-TERM GOAL OF $5B IN REVENUES AND A 10%+ OPERATING MARGIN 2025 TARGETS: 5
Slide 6: Evolved Brand Purpose - Accomplishments
Evolved Brand Purpose 2 0 1 7 - 2 0 2 1 A C C O M P L I S H M E N T S Grew Digital Reduced Occupancy Returned Cash to Shareholders 6
Slide 7: Always Forward Plan Pillars
DIGITAL REVOLUTION ENTERPRISE-WIDEEXECUTE FOCUSED FINANCIAL DISCIPLINE OPERATE WITH BRAND GROWTH PLANS AUTHENTIC PURPOSE EMBODY OUR 7
Slide 8: Our Corporate Purpose
We are here for you on the journey to being and becoming who you are O U R C O R P O R AT E P U R P O S E 8
Slide 9: Purpose-Led Partnerships
OVER 100K ASSOCIATE VOLUNTEER HOURS PURPOSE-LED PARTNERSHIPS Fiscal year-end 2016-2021 9
Slide 10: Top Talent, Diversity, Inclusion
TOP TALENT DIVERSITY INCLUSION 10
Slide 11: Best Places to Work
O N E O F F O R T U N E ’ S BEST PLACES TO WORK IN RETAIL 2 0 2 1 C O R P O R AT E E Q U A L I T Y I N D E X BEST PLACES TO WORK FOR LGBTQ EQUALITY 1 6 Y E A R S I N A R O W 11
Slide 12: Portfolio for customers' life stages
Our portfolio is there for our customers’ journeys through different life stages 12
Slide 13: Always Forward Plan Pillars
DIGITAL REVOLUTION FINANCIAL DISCIPLINE BRAND GROWTH PLANS AUTHENTIC PURPOSE EMBODY OUR ENTERPRISE-WIDEEXECUTE FOCUSED OPERATE WITH 13
Slide 14: Execute focused brand growth plans
A L W A Y S F O R W A R D P L A N Execute focused brand growth plans 14
Slide 15: Abercrombie Brand Purpose
We believe every day should feel as exceptional as the start of a long weekend B R A N D P U R P O S E 15
Slide 16: Abercrombie Is Back
T H E R E I N V E N T I O N O F A FA S H I O N I C O N ABERCROMBIE IS BACK 16
Slide 17: Abercrombie Brands 2022-2025 Target
SALES CAGR +6% TO +8% WOMEN’S SALES GROWTH | STORE EXPANSION | BRAND LOVERS 2 0 2 2 – 2 0 2 5 TA R G E T A B E R C R O M B I E B R A N D S 17
Slide 18: Hollister Brand Purpose
We believe in liberating the spirit of an endless summer inside everyone B R A N D P U R P O S E 18
Slide 19: Hollister U.S. Sales CAGR
Fiscal year-end 2017-2021 +4% SALES CAGR S I N C E 2 0 1 7 U N I T E D S TAT E S 19
Slide 20: Hollister 2022-2025 Target
DATA-DRIVEN STORE GROWTH | EMEA STABILIZATION | EXPAND GEN Z BASE SALES CAGR FLAT TO +2% 2 0 2 2 – 2 0 2 5 TA R G E T 20
Slide 21: Gilly Hicks Brand Purpose
B R A N D P U R P O S E We believe in making the world a happier place through movement by inspiring and enabling just 10 minutes of activity a day. Play Happy! 21
Slide 22: Gilly Hicks Sales Growth Since Relaunch
DOUBLE DIGIT SALES GROWTH Fiscal year-end 2016-2021 S I N C E B R A N D R E L A U N C H : 22
Slide 23: Gilly Hicks 2022-2025 Target
SALES CAGR +15% BRAND AWARENESS | ASSORTMENT ARCHITECTURE | MEN’S EXPANSION 2 0 2 2 – 2 0 2 5 TA R G E T 23
Slide 24: abercrombie kids Brand Purpose
We see the world through kids’ eyes, where play is life and every day is an opportunity to be anything and better everything B R A N D P U R P O S E 24
Slide 25: Social Tourist Brand Purpose
B R A N D P U R P O S E We are creating a world where you always have the support of your community behind you to fuel new adventures and relationships. Now’s the time when risks are power moves and regrets are just good stories. 25
Slide 26: Always Forward Plan Pillars
DIGITAL REVOLUTION FINANCIAL DISCIPLINE BRAND GROWTH PLANS AUTHENTIC PURPOSE EMBODY OUR ENTERPRISE-WIDEEXECUTE FOCUSED OPERATE WITH 26
Slide 27: Transformation 2017-2021
I N C R E A S E D DIGITAL TO 47% P E N E T R AT I O N R E M O V E D ~25% OF SQ FT - 1 . 6 M G R O S S S Q U A R E F E E T 2 0 1 7 - 2 0 2 1 T R A N S F O R M A T I O N Fiscal year-end 2017-2021 27
Slide 28: Enterprise-Wide Digital Revolution
ENTERPRISE-WIDE DIGITAL REVOLUTION THEM EVERYWHERE WOW THEM BETTER KNOW 28
Slide 29: Always Forward Plan Pillars
DIGITAL REVOLUTION FINANCIAL DISCIPLINE BRAND GROWTH PLANS AUTHENTIC PURPOSE EMBODY OUR ENTERPRISE-WIDEEXECUTE FOCUSED OPERATE WITH 29
Slide 30: Agility and Flexibility Is Key
THE ONLY CONSTANT IS CHANGE A G I L I T Y & F L E X I B I L I T Y I S K E Y R E TA I L T R U T H 30
Slide 31: Balance Sheet Strength
BALANCE SHEET STRENGTH T I G H T I N V E N T O R Y M A N A G E M E N T D I S C I P L I N E D C A P I TA L A L L O C AT I O N 31
Slide 32: Inventory Discipline
INVENTORY DISCIPLINE 32
Slide 33: 2025 Targets
Brand Growth Plans Digital Revolution Financial Discipline Authentic Purpose $4.1B - $4.3B REVENUES 8%+ OPERATING MARGIN 2025 TARGETS: 33
Slide 34: Today's Presenters
SAMIR DESAI CHIEF DIGITAL & TECHNOLOGY OFFICER CAREY KRUG ABERCROMBIE BRANDS MARKETING ROBERT ZAJAC HOLLISTER BRANDS MARKETING FRAN HOROWITZ CHIEF EXECUTIVE OFFICER KRISTIN SCOTT PRESIDENT, GLOBAL BRANDS SCOTT LIPESKY CHIEF FINANCIAL OFFICER TODAY’S PRESENTERS 34
Slide 35: The Best Team in Retail
THE BEST TEAM IN RETAIL STORES | DISTRIBUTION | CORPORATE 35
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Slide 37: Brand Growth Plans - Kristin Scott
S H E / H E R Brand Growth Plans Kristin Scott A L W A Y S F O R W A R D P L A N 37
Slide 38: Brands, Generations, Stores, Regions
5 BRANDS CUSTOMER OBSESSED 3 GENERATIONS 700+ STORES3 REGIONS 38
Slide 39: Know Them Better, Wow Them Everywhere
THEM EVERYWHERE WOW THEM BETTER KNOW 39
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Slide 41: Execute focused brand growth plans
A L W A Y S F O R W A R D P L A N Execute focused brand growth plans 41
Slide 42: Abercrombie Brand Purpose
We believe every day should feel as exceptional as the start of a long weekend B R A N D P U R P O S E 42
Slide 43: Women's Business Grown 40% Since 2019
W E H AV E G R O W N T H E WOMEN’S BUSINESS BY 40% S I N C E 2 0 1 9 43
Slide 44: Added 12+ Million New Customers
A D D E D 12+ MILLION NEW CUSTOMERS S I N C E 2 0 1 8 44
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Slide 46: Abercrombie & Fitch Brand Video
ABERCROMBIE & FITCH BRAND VIDEO 46
Slide 47: Our Growth Opportunity
23-40 Years Old 72M Millennials in the U.S. $76B Market1 O UR G ROWT H O P P O RT UN I T Y 1. US Only Market Size; Source: The NPD Group/Consumer Tracking Service, Wearer ages 23-40, 2021 47
Slide 48: Women's Growth, Store Expansion, Brand Lovers
DOUBLE-DIGIT WOMEN’S SALES GROWTH STORE EXPANSION GROW BRAND LOVERS 48
Slide 49: Double-Digit Women's Sales Growth
DOUBLE-DIGIT WOMEN’S SALES GROWTH Build on current momentum through key categories and franchises G R O W T H S T R A T E G Y 49
Slide 50: Double-Digit Women's Sales Growth
D O U B L E - D I G I T W O M E N ’ S S A L E S G R O W T H 50
Slide 51: Double-Digit Women's Sales Growth
D O U B L E - D I G I T W O M E N ’ S S A L E S G R O W T H 51
Slide 52: Double-Digit Women's Sales Growth
D O U B L E - D I G I T W O M E N ’ S S A L E S G R O W T H 52
Slide 53: YPB Video
YPB VIDEO 53
Slide 54: Store Expansion
30-40 NET NEW STORES MARKET-LEVEL SALES & LOCATION DATA STORE EXPANSION G R O W T H S T R A T E G Y A customer-centric experience hub for browsing, buying, or omni activity 54
Slide 55: Grow Brand Lovers
GROW BRAND LOVERS G R O W T H S T R A T E G Y Authentically engage our customers through digital marketing and social selling 55
Slide 56: Abercrombie Marketing - Carey Krug
S H E / H E R Abercrombie Marketing Carey Krug A L W A Y S F O R W A R D P L A N 56
Slide 57: Abercrombie Brand Team
A B E R C R O M B I E B R A N D T E A M COREY ROBINSON ABERCROMBIE MERCHANDISING & DESIGN HE / HIM JOANNA EWING ABERCROMBIE BRANDS CREATIVE DIRECTOR SHE / HER CAREY KRUG ABERCROMBIE BRANDS MARKETING SHE / HER 57
Slide 58: Brand-Building
Our brand purpose was the inflection point for the phenomenal growth we are witnessing today… B R A N D - B U I L D I N G 58
Slide 59: Brand-Building
B R A N D - B U I L D I N G …and the beginning of the next great chapter in the Abercrombie story 59
Slide 60: Our Community
O U R C O M M U N I T YO U R C O U N I T Y Influencers AffiliatesCustomers Editorial Community Brand Partners 60
Slide 61: TikTok's Favorite Fashion Brand
TIKTOK’S FAVORITE FASHION K N O W N A S B R A N D 61
Slide 62: Reach and Social Revenue Growth
2018-2021 Abercrombie & Fitch Reach Social Revenue +1,980% +206% GROWTH GROWTH
Slide 63: Most Loved Product Award
2 0 1 9 2 0 2 0 2 0 2 1 MOST LOVED P RODU CT A W A R D 63
Slide 64: Influencer Marketer of the Year
I N F L U EN C ER MA R KET ER O F T H E Y E A R 2 0 2 1 64
Slide 65: Trending "Abercrombie Is Back"
T R E N D I N G “A BER C ROMBI E I S BAC K” 9 6 % P O S I T I V E I N 2 0 2 1 65
Slide 66: Winning on Social
W I N N I N G O N S O C I A L When leading companies want to innovate, they partner with Abercrombie to participate in their alpha / beta testing 66
Slide 67: #abercrombie Hashtags Used To-Date
#abercrombie hashtags used to-date 343 Million 67
Slide 68: The Trevor Project x Abercrombie
T H E T R E V O R P R O J E C T X A B E R C R O M B I E A community where Everyone Belongs 68
Slide 69: Moving at the Pace of the Consumer
M O V I N G AT T H E PA C E O F T H E C O N S U M E R We have created rich and enduring relationships with our Abercrombie Community 69
Slide 70: Our community agrees: Abercrombie is back
Our community agrees: Abercrombie is back 70
Slide 71: Abercrombie Is Back Video
ABERCROMBIE IS BACK VIDEO 71
Slide 72: Abercrombie Brands 2025 Target
A B E R C R O M B I E B R A N D S +6% to +8% SALES CAGR 2022 - 2025 2 0 2 5 TA R G E T: A L WAY S F O R WA R D P L A N 72
Slide 73: Brand Growth Plans: Hollister
S H E / H E R Brand Growth Plans: Hollister Kristin Scott A L W A Y S F O R W A R D P L A N 73
Slide 74: Hollister Brand Purpose
We believe in liberating the spirit of an endless summer inside everyone B R A N D P U R P O S E 74
Slide 75: Hollister Brand Video
HOLLISTER BRAND VIDEO 75
Slide 76: Hollister The Acad=my Group
HOLLISTER THE ACAD=MY GROUP =>
Slide 77: We Know Gen Z
W E K N O W G E N Z . 77
Slide 78: U.S. Sales Grown at 4% CAGR
U . S . S A L E S GROWN AT 4% CAGR S I N C E 2 0 1 7 Fiscal year-end 2017-2021 78
Slide 79: Attracted 20+ Million New Customers
AT T R A C T E D 20+ MILLION NEW CUSTOMERS S I N C E 2 0 1 8 Fiscal year-end 2018-2021 79
Slide 80: Grew Retention Rate
G R E W RETENTION RATE S I N C E 2 0 1 8 Fiscal year-end 2018-2021. US and EMEA only. 80
Slide 81: Hollister Addressable Market
1. US Only Market Size; Source: The NPD Group/Consumer Tracking Service, Wearer ages 13-22, 2021 H O L L I S T E R 67M GEN ZS IN THE UNITED STATES $ 4 4 B A D D R E S S A B L E M A R K E T 1 81
Slide 82: Data-Driven Store Growth, EMEA Stabilization, Expand Gen Z Base
DATA-DRIVEN STORE GROWTH EMEA STABILIZATION EXPAND GEN Z BASE 82
Slide 83: Data-Driven Store Growth
DATA-DRIVEN STORE GROWTH Hollister Revenue Derived from Stores in 2021 65% Net New Stores 2022 –2025 Plan 30-40 83
Slide 84: EMEA Stabilization
EMEA STABILIZATION SALES GROWTH EMEA full-year sales decline from 2019 to 2021 ~$60M Q1 2022 compared to Q1 2021 84
Slide 85: Expand Gen Z Base
EXPAND GEN Z BASE Market Share Opportunity 1% Market Share Value1 19-22 YO ~$190M 1. US Only Market Size; Source: The NPD Group/Consumer Tracking Service, Wearer ages 19-22, US Dollar sales, 2021 85
Slide 86: Hollister Marketing - Robert Zajac
H E / H I M Hollister Marketing Robert Zajac A L W A Y S F O R W A R D P L A N 86
Slide 87: Expanding Gen Z Base
Global Teen All Gen Z E X PA N D I N G G E N Z B A S E 87
Slide 88: We Know Gen Z
W E K N O W G E N Z . 88
Slide 89: Brandlove, Popularity, Diversity
BRANDLOVE POPULARITY REFLECTING DIVERSITY COOL UNDERSTANDS GEN Z 89
Slide 90: Club Cali
CLUB CALI 3 5 M I L L I O N M E M B E R S $ 6 . 6 B I N R E V E N U E CUSTOMERS A T T R A C T E D 2 0 + M I L L I O N N E W C U S T O M E R S I N C R E A S E D R E T E N T I O N Fiscal year-end 2016-2021Fiscal year-end 2018-2021. US and EMEA only. 90
Slide 91: United States Growth Since 2017
Since 2017 U N I T E D S TAT E S G R O W T H +4% SALES CAGR S I N C E 2 0 1 7 Fiscal year-end 2017-2021 91
Slide 92: Hollister Sizzle Reel
HOLLISTER SIZZLE REEL 92
Slide 93: Loyalty Driven, Human Powered, Socially Fueled
LOYALTY DRIVEN HUMAN POWERED SOCIALLY FUELED W E A R E W E A R E W E A R E 93
Slide 94: The Hollister Collective: Human Powered
94 T H E H O L L I S T E R C O L L E C T I V E Human Powered
Slide 95: Good Vibras
GOOD VIBRAS T H E H O L L I S T E R C O L L E C T I V E Co-creating content and product to celebrate Latinx diversity 95
Slide 96: Hollister Collective Gaming
T H E H O L L I S T E R C O L L E C T I V E GAMING Capturing new audiences, growing the brand and the business 96
Slide 97: The Hollister Community: Socially Fueled
T H E H O L L I S T E R C O M M U N I T Y Socially Fueled 97
Slide 98: Social Innovation: Commerce
S O C I A L I N N O VAT I O N COMMERCE +70% Social Sales +80% Instagram Storefront Visitors May 2021- May 2022 98
Slide 99: Social Innovation: Snapchat
S O C I A L I N N O VAT I O N SNAPCHAT Leading with technology to drive Brand Love and omnichannel commerce 99
Slide 100: Hollister House Rewards Membership
H O L L I S T E R H O U S E R E WA R D S MEMBERSHIP Iterative membership program with evolving benefits and services, tailored to Gen Z 100
Slide 101: Hollister 2025 Target
H O L L I S T E R FLAT to +2% SALES CAGR 2022 – 2025 2 0 2 5 TA R G E T: A L WAY S F O R WA R D P L A N 101
Slide 102: Brand Growth Plans: Gilly Hicks
S H E / H E R Kristin Scott A L W A Y S F O R W A R D P L A N Brand Growth Plans: Gilly Hicks 102
Slide 103: The World's Happiest Active Lifestyle Brand
THE WORLD’S HAPPIEST ACTIVE LIFESTYLE BRAND
Slide 104: Minutes of Activity a Day Can Lead to a Happier Life
GILLY HICKS 10 MINUTES OF ACTIVITY A DAY, CAN LEAD TO A HAPPIER LIFE “People who work out even once a week or for as little as 10 minutes a day tend to be more cheerful than those who never exercise. And any type of exercise may be helpful." - The Journal of Happiness Studies featured in the New Yor
Slide 105: Gilly Hicks
aia ie HICKS
Slide 106: Gilly Hicks Brand Video
GILLY HICKS BRAND VIDEO 106
Slide 107: Gilly Hicks Addressable Activewear Market
G I L LY H I C K S RESONATING WITH 13 TO 40 YEAR OLDS $ 4 7 B A D D R E S S A B L E A C T I V E W E A R M A R K E T 1 1. US Only Market Size; Source: The NPD Group/Consumer Tracking Service, Wearers ages 13-22, 2021 107
Slide 108: Grow Brand Awareness, Assortment Architecture, Build Men's Business
GROW BRAND AWARENESS ASSORTMENT ARCHITECTURE BUILD MEN’S BUSINESS 108
Slide 109: Grow Brand Awareness
GROW BRAND AWARENESS I N C R E A S E MARKETING EFFORTS O P E N 30-40 STORES B y 2 0 2 5 ( P l a n n e d S t a n d a l o n e Fo r m a t s ) 109
Slide 110: Assortment Architecture: Active Category
ASSORTMENT ARCHITECTURE G R O W ACTIVE CATEGORY TO 50% O f To t a l S a l e s B y 2 0 2 5 110
Slide 111: Assortment Architecture: Lounge Category
ASSORTMENT ARCHITECTURE D I S T O R T LOUNGE CATEGORY TO 30% O f To t a l S a l e s B y 2 0 2 5 111
Slide 112: Build Men's Business
BUILD MEN’S BUSINESS I N C R E A S E MEN’S BUSINESS TO 20% O f To t a l S a l e s B y 2 0 2 5 112
Slide 113: Gilly Hicks 2025 Target
G I L LY H I C K S +15% SALES CAGR 2022 - 2025 2 0 2 5 TA R G E T: A L WAY S F O R WA R D P L A N 113
Slide 114: abercrombie kids Brand Purpose
We see the world through kids’ eyes, where play is life and every day is an opportunity to be anything and better everything B R A N D P U R P O S E 114
Slide 115: Social Tourist Brand Purpose
B R A N D P U R P O S E We are creating a world where you always have the support of your community behind you to fuel new adventures and relationships. Now’s the time when risks are power moves and regrets are just good stories 115
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Slide 118: Digital Revolution - Samir Desai
H E / H I M Digital Revolution Samir Desai A L W A Y S F O R W A R D P L A N 118
Slide 119: 2021 Digital Results
A B E R C R O M B I E & F I T C H H O L L I S T E R A N D G R O W I N G 60% OF REVENUE FROM DIGITAL 300M+ VISITS A YEAR ON DIGITAL 20%+ DTC BUSINESS IN MOBILE APP 2 0 2 1 R E S U L T S 119
Slide 120: Know Them Better, Wow Them Everywhere
THEM EVERYWHERE WOW THEM BETTER KNOW 120
Slide 121: Enterprise-Wide Digital Revolution
ENTERPRISE-WIDE DIGITAL REVOLUTION THEM EVERYWHERE WOW THEM BETTER KNOW 121
Slide 122: 360-degree view of each customer
Using AI and machine learning, we now have a 360-degree view of each customer KNOW THEM BETTER 122
Slide 123: Knowing the customer improves how we work
Trend | Inventory | Customer Experience | Real Estate Knowing the customer improves how we work KNOW THEM BETTER 123
Slide 124: Data and digital product testing
We use data and digital product testing to predict fashion trends and build seasonal strategies KNOW THEM BETTER 124
Slide 125: Planning with automated algorithms and AI
Our planning teams are moving to automated algorithms and AI to drive decisions KNOW THEM BETTER 125
Slide 126: Personalized experiences
We can anticipate customer needs and serve highly personalized experiences KNOW THEM BETTER 126
Slide 127: Data science for store locations and formats
Data science identifies locations and store formats that will perform best KNOW THEM BETTER 127
Slide 128: Using Data to Inform Store Location: Chicago
STORE LOCATION U S I N G D ATA T O I N F O R M C H I C A G O , I L L I N O I S OPENINGS <‘21 ’22 128
Slide 129: We operate more like a tech company
DATA DRIVEN WITH AGILITY CUSTOMER OBSESSED RESULTS ORIENTED LEARN FAST TALENT & CULTURE We operate more like a tech company than a traditional retailer 129
Slide 130: Talent & Culture: top talent
TALENT & CULTURE We have built a team of top talent from leading brands and businesses 130
Slide 131: Talent & Culture: digital academy
TALENT & CULTURE We are building a digital academy and citizen developers to maximize talent 131
Slide 132: Enterprise-Wide Digital Revolution
ENTERPRISE-WIDE DIGITAL REVOLUTION THEM EVERYWHERE WOW THEM BETTER KNOW 132
Slide 133: Modernizing our foundational systems
We are modernizing our foundational systems WOW THEM EVERYWHERE ERP Platform | Database | Supply Chains | Integration Associate Experience | Store Experience 133
Slide 134: The future of retail is retail everywhere
The future of retail is retail everywhere WOW THEM EVERYWHERE Discovery | Browse | Purchase | Fulfillment | Loyalty 134
Slide 135: In Store, At Home
I N S T O R E A T H O M E WOW THEM EVERYWHERE 135
Slide 136: Enterprise-Wide Digital Revolution
ENTERPRISE-WIDE DIGITAL REVOLUTION THEM EVERYWHERE WOW THEM BETTER KNOW 136
Slide 137: Financial Discipline - Scott Lipesky
H E / H I M Financial Discipline Scott Lipesky A L W A Y S F O R W A R D P L A N 137
Slide 138: Creating Shareholder Value: 2025 Targets
138 A LWAY S FO R WA R D P L A N CREATING SHAREHOLDER VALUE 2 0 2 5 TA R G E T S +3% TO 5% SALES CAGR OFF 2022 8%+ OPERATING MARGINS INVESTMENT DISCIPLINED & AGILE PLAN FREE CASH FLOW $600M MINIMUM GENERATION 2022-2025 138
Slide 139: 2018-2021 Results vs 2018 Investor Day Goals
$642M 2018 - 2021 2 0 1 7 – 2 0 2 1 R E S U L T S RETURNED CASH TO SHAREHOLDERS GREW SALES LOW-SINGLE DIGIT CAGR 9.6% EXPANDED GROSS MARGIN ADJUSTED 2021 LEVERAGED EXPENSES TRIPLED 2017 ADJUSTED OPERATING MARGIN 2 0 1 8 I N V E S T O R D A Y G O A L S 139
Slide 140: 2025 Targets: Revenues and Operating Margin
$4.1B - $4.3B REVENUES 8%+ OPERATING MARGIN LONGER-TERM GOAL OF $5B IN REVENUES AND A 10%+ OPERATING MARGIN A L WAY S F O R WA R D P L A N 2025 TARGETS: 140
Slide 141: Financial Principles
A L W A Y S F O R W A R D P L A N FINANCIAL PRINCIPLES EXPECTED LOW- TO MID- SINGLE DIGIT SALES GROWTH CAGR FROM 2022 - 2025 INVESTMENTS IN DIGITAL, TECH, AND STORE GROWTH UTILIZE A PORTION OF EXCESS FREE CASH FOR SHARE REPURCHASES REFLECTS ASSUMPTIONS ON INFLATION AND CONSUMER HEALTH 141
Slide 142: Sales Growth by Brand
A L W A Y S F O R W A R D P L A N SALES GROWTH BY BRAND 2 0 2 2 T O 2 0 2 5 T A R G E T C A G R +6% TO +8% FLAT TO +2% +15% 142
Slide 143: Sales Growth by Region
+2% TO +4% +4% TO +6% +LOW-DOUBLE DIGIT % E M E A A P A C A L W A Y S F O R W A R D P L A N SALES GROWTH BY REGION 2 0 2 2 T O 2 0 2 5 T A R G E T C A G R U N I T E D S TA T E S 143
Slide 144: Sales Growth by Channel
SALES GROWTH BY CHANNEL A L W A Y S F O R W A R D P L A N 2 0 2 2 T O 2 0 2 5 T A R G E T C A G R +MID-SINGLE +LOW-SINGLE D I G I TA L S T O R E S D I G I T % D I G I T % ~50% DIGITAL PENETRATION RETURN TO NET STORE OPENERS 144
Slide 145: Digital Sales Growth
2 0 1 7 T O 2 0 2 1 DIGITAL SALES GROWTH $150M INVESTED IN DIGITAL & TECH $750M GROWTH IN DIGITAL SALES INVEST IN PEOPLE, SYSTEMS, AND TOOLS MOVE AT THE SPEED OF OUR CUSTOMER A L W A Y S F O R W A R D P L A N 2 0 2 2 T O 2 0 2 5 145
Slide 146: Positioning for Growth: Store Fleet
2 0 1 7 - 2 0 2 1 POSITIONING FOR GROWTH S TO R E F L E E T 146
Slide 147: Store Fleet Optimization
STORE FLEET OPTIMIZATION 868 6.7M A L W A Y S F O R W A R D P L A N 729 5.1M $660M $430M ~15% ~20% STORE COUNT GROSS SQ. FT. OCCUPANCY FOUR-WALL OP MARGIN %* 2 0 1 7 2 0 2 1 * N O N - G A A P . S E E A P P E N D I X . 147
Slide 148: Store Fleet Opportunity
STORE FLEET OPPORTUNITY 729 5.1M A L W A Y S F O R W A R D P L A N 825 2 0 2 5 $430M +3% to +5% ~20% >20% STORE COUNT GROSS SQ. FT. OCCUPANCY F U N D A M E N T A L S OMNI-ENABLED; MORE OFF-MALL LOCATIONS NEW STORES BETWEEN 2,500 - 6,000 SQ. FT. ~2-YEAR PAYBACK FOR NEW A&F AND HCo STORES * N O N - G
Slide 149: Gross Margin 2017-2021
149 59.7% 60.2% 59.4% 60.5% 62.3% 2017 2018 2019 2020 2021 GROSS MARGIN A L W A Y S F O R W A R D P L A N 149
Slide 150: Gross Margin Outlook
$100M NET FREIGHT & RAW MATERIALS HEADWIND VS 2021 2 0 2 5 Y E A R E N D 62.3% 2 0 2 1 60% - 63% MODEST AUR BENEFIT A&F BRAND MIX BENEFIT GROSS MARGIN A L W A Y S F O R W A R D P L A N 150
Slide 151: Inventory Management Discipline
I N V E N T O R Y M A N A G E M E N TQ 1 2 0 2 2 E N D I N G U N I T S O N H A N D ~93% CURRENT CURRENT UNIT INVENTORY COMPOSITION DISCIPLINE FY 2022 RECEIPT UNITS FLAT VS 2021 CONTINUOUS RIGHT-SIZING OF UNIT BUYS 7% CLEARANCE CARRYOVER (1%) vs. Q1 LY 19% +5% vs. Q1 LY FUTURE SET 16% (4%) vs. Q1 LY
Slide 152: Inventory Management Discipline
I N V E N T O R Y M A N A G E M E N TQ 1 2 0 2 2 E N D I N G U N I T S O N H A N D ~93% CURRENT CURRENT UNIT INVENTORY COMPOSITION DISCIPLINE EXPECT FY 2022 RECEIPT UNITS FLAT VS. 2021 CONTINUOUS RIGHT-SIZING OF UNIT BUYS 7% CLEARANCE CARRYOVER (1%) vs. Q1 LY 19% +5% vs. Q1 LY FUTURE SET 16% (4%) vs
Slide 153: Operating Margin Target
153 OPERATING MARGIN A L W A Y S F O R W A R D P L A N 2 0 2 5 T A R G E T 2 0 1 7 59.7% 62.3% 2 0 2 1 56.8%* 52.7%* 2.9%* 9.6%* GROSS MARGIN OPERATING EXPENSE OPERATING MARGIN 60% - 63% 2 0 2 5 52% - 53% 8%+ * A D J U S T E D N O N - G A A P M E A S U R E S . S E E A P P E N D I X F O R G A A P R E
Slide 154: Capital Allocation Strategy
CAPITAL ALLOCATION STRATEGY A L W A Y S F O R W A R D P L A N $700M Minimum Liquidity Target EXCESS $700M Minimum Liquidity Target 2021 2025 LONGER-TERM Increasing Capital Investments into the Business Maintaining Serial Share Repurchaser Mentality Dividend and / or Debt Repayment 154 154
Slide 155: Capital Investment Plan
CAPITAL INVESTMENT PLAN A L W A Y S F O R W A R D P L A N 155 DIGITAL & TECHNOLOGY STORES OTHER SUPPLY CHAIN 2 0 2 2 T O 2 0 2 5 TA R G E T $150M - $175M ANNUALLY 155
Slide 156: Shareholder Returns
SHAREHOLDER RETURNS A L W A Y S F O R W A R D P L A N 2 0 1 8 – 2 0 2 1 $7 82 M $6 42 M F R E E C A S H F L O W * R E T U R N T O S H A R E H O L D E R S 2 0 2 2 - 2 0 2 5 $6 00 M + F R E E C A S H F L O W * SHARE REPURCHASES: $524M OUTSTANDING SHARE REDUCTION: >20% DIVIDENDS: $118M EXPECT TO COMMIT
Slide 157: Creating Shareholder Value: 2025 Targets
157 A LWAY S FO R WA R D P L A N CREATING SHAREHOLDER VALUE 2 0 2 5 TA R G E T S +3% TO 5% SALES CAGR OFF 2022 8%+ OPERATING MARGINS INVESTMENT DISCIPLINED & AGILE PLAN FREE CASH FLOW $600M MINIMUM GENERATION 2022-2025 157
Slide 158: Our Corporate Purpose
We are here for you on the journey to being and becoming who you are O U R C O R P O R AT E P U R P O S E 158
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159
Slide 160: Q&A
Q&A 160
Slide 161: Appendix
161 APPENDIX A L WAY S F O R WA R D P L A N
Slide 162: Use of Non-GAAP Measures
USE OF NON-GAAP MEASURES The non-GAAP metrics discussed in this presentation include adjusted operating expense, adjusted operating income, and free cash flow. The company believes that each of the non-GAAP financial measures presented herein are useful to investors as they provide a measure of the
Slide 163: Reconciliation of Non-GAAP Measures
RECONCILIATION OF NON-GAAP MEASURES 1 Operating expense includes stores, distribution, marketing, general, administrative expense, in addition to exit charges, asset impairments and other operating income, net. 2 Excluded items include $15.1 million in legal charges and $13.7 million in asset impair
Slide 164: Reconciliation of Non-GAAP Measures: Free Cash Flow
RECONCILIATION OF NON-GAAP MEASURES Net cash provided by operating activities Less: Purchases of property and equipment Free Cash Flow $277,782 2 0 2 1 $96,979 $180,803 164 $404,918 2 0 2 0 $101,910 $303,008 $300,685 2 0 1 9 $202,784 $97,901 $352,933 2 0 1 8 $152,393 $200,540 $1,336,318 C u m u l a